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Last Updated Wednesday, June 05, 2002 02:30 PM CST
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Q1 Delinquencies Up 28 BPS From Year Ago
Mortgage loan delinquencies are 28 basis points (BPS) higher than the first quarter of 2001, according to latest quarterly National Delinquency Survey from the Mortgage Bankers Association of America (MBA). Compared to the fourth quarter of 2001, MBA said the overall share of homeowners paying their mortgages late was relatively flat at 4.65%. The percentage of loans in the process of foreclosure at the end of the most recent quarter rose 6 BPS from the fourth quarter to 1.10%, while the percentage of loans in which foreclosure started during the quarter remained at 0.37 percent.
COFI Changes Course
The cost of funds index (COFI) for the 11th District savings institutions rose 0.07% -- or seven basis points -- from the prior month to 2.723%. The Federal Home Loan Bank of San Francisco reports the COFI about thirty days following the end of each month.
ARM Falls 9 BPS
According to the most recent survey of 125 thrifts, commercial banks and mortgage lending companies by Freddie Mac, the average one-year ARM fell 0.09% -- or nine basis points (BPS) -- from the prior week to 4.76%. The thirty-year fixed rate mortgage was down 5 BPS to 6.76%, and the fifteen year moved down six BPS to 6.22%, according to Freddie. Overall applications were up nearly three percent, MBA reported, and refinance applications were up more than five percent. The majority of mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com don't see rates changing over the next five weeks.
Baby Come Back
Have you ever received a referral from a real estate agent and successfully guided the transaction to settlement only to never see another referral from that agent? Perhaps you felt that you had delivered great customer service, followed-up with a thank you note and placed a few perfunctory phone calls. This left you more confused than ever as to why another referral did not follow. How can you avoid losing this opportunity time and time again? In order to fully understand how to construct a solution, we must first analyze the reasons that you may have failed to achieve long term success regarding repeat business. The first possibility is that you simply did not ask for another referral. The second possibility is that the agent and/or consumer was not as happy with the service as you thought. Finally if you were not present at settlement, chances are that you did not exceed the expectations of your target.
Fixed Rates, Apps Fall
Freddie Mac reported in its weekly survey of 125 thrifts, commercial banks and mortgage lending companies that the average 30-year fixed rate mortgage (FRM) fell 0.08 percent -- or eight basis points (BPS) -- from the prior week to 6.81%. The average one-year adjustable rate mortgage (ARM) rose 4 BPS to 4.85%, according to Freddie. ARM activity reached 17.5% of all applications according to the Mortgage Bankers Association of America (MBA). MBA said overall applications were down more than five percent, and refinance applications were down over eight percent. The majority of mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect rates to remain within two BPS of current levels over the next five weeks.
Citigroup To Acquire Golden State
Citigroup announced that it will purchase Golden State Bancorp, the indirect parent of First Nationwide Mortgage. Citigroup will pay about $16.40 in cash and 0.5234 Citigroup shares for each share of Golden State. Golden State is the parent company of Cal Fed, the second largest thrift in the U.S. The First Nationwide unit is part of Cal Fed. The transaction is expected to close in the fourth quarter of this year.
Subprime Time?
Could the currently fading refinance market mean that we are headed into a subprime mortgage boom again? Ratings agency Moody's Investor Service recently reported that home equity securitizations -- which include subprime mortgage loans -- were $97 billion during 2001, 63% more than the prior year. Moody's expects home equity securitizations to reach $105 billion this year. Because mortgage rates are expected to head even higher by the end of this year, further declines in refinance activity may provide even more fuel for a subprime resurgence. However, the FDIC reported in February that the incidence of significant repayment difficulties among subprime mortgage borrowers is increasing. Moody's says that securitizations in 2000 and 2001 are performing worse than earlier securitizations, likely due to relaxed underwriting standards due to lower profitability. The Fed decreased the discount rate by 475 basis points (BPS) last year, the one-month LIBOR followed suit. As a result, adjustable rate subprime issuers have seen there excess spreads improve by 350-400 BPS. Moody's noted that if rates rise as expected by the end of the year, subprime spreads (and profitability) will drop. Even with potentially higher demand from originators for subprime lending products, profits and performance may keep a lid on excessive growth.
Strong ARM Tactics
In its survey of 125 thrifts, commercial banks and mortgage lending companies, Freddie Mac reported that the average one-year ARM was up just one basis point to 4.81%, not far from its lowest point since 1994. While the ARM was nearly unchanged, Freddie said that the average 30-year fixed rate mortgage (FRM) was 6.89%, up from 6.79% the prior week. The bigger jump in the 30-year average pushed the spread between FRM and the ARM to 2.08% from less than 2% last week. According to MBA, ARM applications represented 17% of total applications, up from about 15% last week. ARM activity had been as low as 8.3% as recently as November. Overall applications were down nearly nine percent, according to MBA. While half of Bankrate.com's survey respondents think rates will remain within 2 BPS of their current levels over the next five weeks, 44% think rates will rise.
Former Mortgage Banker Sentenced to 8 Years
David Allan Van Velzer, Jr., 40, was convicted of twelve counts of wire fraud and seventeen counts of money laundering following a criminal trial in December. Van Velzer operated his company, American Mortgage Industries, in Las Vegas and southern California. The U.S. Attorney said that between 1996 and 1997, he used lines-of-credit from Imperial Warehouse Lending Group and Bank One Arizona to fund loans that were sold to Freddie Mac and ICI Funding Corporation. Van Velzer allegedly misrepresented information about his borrowers to facilitate loan transactions, the U.S. Attorney said. Van Velzer's misrepresentations allegedly included creating false loan documents; showing people as buyers when he knew that they were not actually buying the properties; using fictitious income and assets numbers; presenting vacant pieces of land as residential properties; using inflated property values; and using fraudulently notarized documents. Van Velzer was sentenced to 97 months in federal prison and ordered to pay restitution of $1.6 million to Bank One of Arizona and $2.7 million to Freddie Mac.
I See You Baby -- Visualization techniques help originators ascend to top producer levels
You can increase your loan originations by learning how to maintain higher levels of focus and intensity on demand. According to a recent teleconference organized by the Mortgage Bankers Association of America (MBA) entitled "Ultimate Guide to Mental Toughness," the Mark McGuires and Tiger Woods of the sports world work with sports psychologists to learn how to increase these levels. The event was presented by moderator Dan Teitelbaum. Certain triggers raise personal motivation. For instance, a new home, a higher net worth or a new sports car might be personal triggers. Business triggers include top performer recognition or establishment of new referral sources such as real estate agents and builders. Instead of focusing on "being in the new house in one year," focus on the more emotional event of the housewarming party. Citigroup announced that it will purchase Golden State Bancorp, the indirect parent of First Nationwide Mortgage. Citigroup will pay about $16.40 in cash and 0.5234 Citigroup shares for each share of Golden State. The company said the acquisition will make its conforming mortgage business the 7th largest loan originator, up from the tenth spot currently. Citigroup also said it will become the nations 6th largest servicer of these loans, up from number nine. The transaction is expected to close in the fourth quarter of this year.
Rates Fallings, Apps Rising
Freddie Mac reported in its weekly survey of 125 thrifts, commercial banks and mortgage lending companies, that the average 30-year fixed rate mortgage (FRM) fell 0.10% -- or ten basis points (BPS) -- from the prior week to 6.78%. The average one-year adjustable rate mortgage (ARM) fell sixteen BPS to 4.75 percent. MBA said overall applications rose 9.2%. Refinance applications jumped 16% and represented 38.7% of total applications. Bankrate.com said 66% of the respondents expect for rates not to change more than 2 BPS over the next 30-45 days, while the remaining respondents were evenly split between rising and falling rates.
COFI Anyone?
According to an announcement from the Federal Home Loan Bank of San Francisco (FHLB), the monthly weighted average COFI fell to 2.653% in March from 2.744% the prior month. The COFI reflects the interest paid by 11th District savings institutions in Arizona, California, and Nevada on their various sources of mortgage money. The COFI average is reported by the FHLB about 30 days after the end of each month.
10+ Year Sentences In Mortgage Fraud Case
Kenneth Bradford and Jo Ellen Bryant received respective prison sentences of 12 and 10 years' for three counts of felony theft by taking, and both sentences will be followed by at least 18 years' probation. The two were convicted in the DeKalb County Superior Court on March 31st. The Attorney General said the pair, who held themselves out as a married couple under the fictitious names of Ken and CJ Taylor, owned a company called Prime Plus which bought and sold residential property to individuals seeking to own "investment" property. Investors were promised full property management services, including the finding of tenants that were to include business people and athletes. According to the Atlanta Journal-Constitution, Teresa Harriss -- the mortgage broker who facilitated their crimes -- has pled guilty and was sentenced to two years in prison.
Flagstar Reports $9.3 Billion 1st Quarter Production
Flagstar Bancorp, Inc. reported record first quarter mortgage loan production of $9.3 billion, according to its announcement of earnings this week. This is more than seventy percent higher than the $5.4 billion production during the first quarter of last year. Flagstar, which says it operates 73 loan origination centers and 15 correspondent lending offices across the U.S., reported record levels of mortgage banking income.
Judge Ran Mortgage Company From Bench
A Georgia judge ran his mortgage company out of his courtroom for 18 months in broad daylight, according to the National Law Journal (Journal). David F. Crenshaw ran The Mortgage Team of Georgia, Inc. from his Twiggs County courtroom on Main Street in Jeffersonville, the Journal said in its annual look at misdeeds from the bench. Commissioners let Crenshaw hire an extra employee in 1998 when he said he needed more help. However, Crenshaw allegedly used the employee mostly for his mortgage company, which had the same address as the court. "I filed some tickets one time," the employee was quoted as saying, describing her official work. "That took maybe 15 minutes. I worked on two elections. Maybe five or six hours."
$24.62 Billion Q1 Production At ABN AMRO
ABN AMRO Mortgage Group's first quarter production was $24.62 billion, an 83% increase from the first quarter of last year, according to an announcement this week from the company. For the month of March, the group's production was $8.74 billion, up 10% from February and 51% higher than March last year. The company said it expects strong production through the end of the second quarter to be enhanced by the "ramp up" of its InterFirst wholesale construction lending unit.
Applications Down 16% From Year-Ago Levels
According to the weekly application survey of mortgage bankers, commercial banks and thrifts by the Mortgage Bankers Association of America (MBA), loan applications edged up from the prior week by nearly two percent. In its weekly survey of 125 thrifts, commercial banks and mortgage lending companies, Freddie Mac said the average 30-year fixed rate mortgage (FRM) fell 0.05% -- or five basis points (BPS) -- from last week to 6.94%. The average 1-year adjustable rate mortgage (ARM) was 4.95%, down five BPS from last week, according to Freddie. Half of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect for rates to stay within two BPS of their current levels over the next five weeks, while 36% expect rates to rise and 14% expect rates to fall.
Wells Fargo Q1 Production $68 Billion
Wells Fargo & Company said in its first quarter earnings announcement that its mortgage origination volume was $68 billion during the period, a 134% increase from the first quarter of last year. The company reported that total loans averaged $172 billion for the quarter, eight percent higher than the same period last year and six percent higher when adjusted for acquisitions. Wells said during the quarter its mortgage servicing portfolio surpassed the half trillion dollar milestone, ending the quarter at $513 billion.
$59.16 Billion 1st Quarter Production At Washington Mutual
In its announcement of first quarter earnings, banking giant Washington Mutual, Inc. said it had record loan volume of $65.27 billion, including $59.16 billion in single-family residential (SFR) mortgage loan production. Mortgage loans were 187% higher than the first quarter of last year and 8% better than the fourth quarter. The company attributed the increase in loan volume to a 29 percent rise in adjustable-rate mortgage volume over the fourth quarter.
$8.5 Billion 1st Quarter Production At Cendant
Mortgage production reached $8.5 billion during the first quarter at Cendant Corporation -- up 45% from the first quarter of 2001 -- according to an announcement of first quarter results. Cendant Mortgage, which says it is one of the leading retail originators and inbound telemarketers of mortgages in the U.S., originates, sells and services residential mortgage loans. Cendant also reported that its average servicing portfolio reached $99.1 billion, 22% higher than the same time last year.
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